Toyota's future uncertain

Holden and Ford could close down earlier than their planned 2017 and 2016 dates, according to a position paper that pre-empts the Productivity Commission's final report into the Australian automotive sector, due in March.

The 215-page position paper released by the government-appointed body paints a stark picture for the ravaged local car industry and puts the squeeze on Toyota Australia's local manufacturing future.

The preliminary report asserts that "Policy rationales for specific assistance to automotive manufacturing are weak" and that "The community would benefit from the ending of assistance to automotive manufacturing through the Automotive Transformation Scheme (ATS)."

Not only does this darken the already gloomy outlook for Toyota Australia's car manufacturing future, already in jeopardy after Ford and Holden's decisions to pack up shop, but it could see Ford and Holden ceasing operations earlier than planned.

According to the report, pulling funds out of the ATS too quickly "could elevate the risk of earlier plant closures by Ford and Holden, and might negatively affect investment decisions by Toyota and its component suppliers."

The Liberal government made an election promise to cull the ATS of $500 million, sometime between 2015 and 2017, and prior to the ATS's scheduled conclusion in 2020.

The Productivity Commission warns that stripping $500 million from the ATS would "result in costs greater than the savings benefits."

Ford has previously stated its intention to end local manufacturing operations by October 2016, and Holden by the end of 2017. However neither company has ruled out earlier shutdowns, should conditions worsen.

Toyota is not commenting on the Productivity Commission's position paper released today, and is believed to still be working towards its goal of manufacturing the all-new 2018 Toyota Camry in Australia for local and export consumption.

Even if Toyota were to build the new generation Camry in Australia, the Productivity Commission's position paper recommends that all government assistance be ceased in 2020, which places even more pressure on Toyota.

Toyota will make a decision on its local manufacturing future in Australia later this year.

Check out the Productivity Commission's position paper.

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